On Capitol Hill today, big businesses, labor unions, Hillary Clinton, and members of Congress are collaborating to increase our long-term deficit and debt problems. That, in and of itself, may not seem unusual. But what is unusual is the method through which they are doing so: delaying the onset of Obamacare’s “Cadillac tax.”
On the surface, delaying the onset of a tax contained in Obamacare seems like a win-win for conservatives. We like delaying taxes, and we like delaying provisions of Obamacare. But there’s a reason that the aforementioned big businesses, labor unions, and Democrats also support the delay of the Cadillac tax: because doing so will, over the long term, actually increase the health-care system’s burden on American taxpayers.
If you’ve followed the conservative health-care-policy discussion, you know that the original sin of our overpriced health-care system was World War II–era wage controls that excluded employer-sponsored health insurance from taxable income. That law made workers dependent on their employers for health insurance, instead of buying it for themselves, as we do for car insurance, homeowners’ insurance, and life insurance.
By taking health insurance out of the free, individual market, and assigning it to employers and the government, the U.S. has made it nearly impossible for individuals to control their own health-care dollars and shop for the care they need. That problem, in turn, has made American health care extremely expensive, because individuals are far removed from the cost and value of the care they receive.
Obamacare, as we know, is a terrible mess. But the law’s Cadillac tax is the law’s least-bad provision, one that resembles the universal desire of the conservative health-policy community to begin equalizing the tax treatment of individually purchased and employer-sponsored health coverage. Only when that tax treatment is equalized will we have any prospect of a true free market in health care.
Big businesses oppose the Cadillac tax because if workers aren’t dependent on them for health coverage, it’s easier for employees to seek jobs elsewhere, or strike out on their own. Labor unions oppose the Cadillac tax because a big part of their economic power comes from the extravagant health-care benefits that they negotiate. Hillary Clinton opposes the Cadillac tax because her two most important constituencies are labor unions and big business.
Some Republicans may believe that there is short-term political gain in supporting a delay in the Cadillac tax, for the reasons I outlined in the beginning of this post. But by delaying Obamacare’s one somewhat useful cost-control feature, and not replacing it with a better one, such as a standard deduction for the purchase of health insurance, Republicans will drive up the cost of health care, especially over the long run. Driving up the cost of health care means driving up the cost of the 45 percent of health care that is funded by the government. And driving up government spending means that taxpayers, in the end, will be footing a bigger bill.
If sticking it to taxpayers wasn’t enough, delaying the Cadillac tax will make it harder to repeal and replace Obamacare, and will enrich labor unions, who will use their newfound income to oppose conservative reforms in every area of policy. If Republicans want to shed their label as the “stupid party,” junking the Cadillac tax delay would be a good place to start.






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